A good option for cash and transactions when travelling overseas
Travelling overseas is a wonderful opportunity to experiences other sights, people, lifestyle and cultures. It is something that many of my clients choose to do as a preferred way to spend their time and money. I always enjoy hearing about the trips and also about the excitement that comes with planning the trip. Helping clients manage their money in a way that supports aspirations like this is one of the most satisfying aspects of financial advice.
One part that often raises some questions and doubts relates to the way to money is organised when travelling.
Having some cash in the form of local currency is always appropriate. However, anyone who has been to Italy or some other parts of Europe will know of the risks of carrying too much cash as the pickpockets and gypsies strive to separate you from your cash and valuables.
So taking a card makes sense, which we still need to keep safe but at least we are not displaying cash for others to see, which is not only a risk, but in places like Japan, showing cash is not culturally ideal and like many things in the land of the rising Sun, discretion is more appropriate when handling cash.
The key points and costs to consider when you arrange a card are;
Is there a transaction fee to use the card?
Is there a commission or fee payable on the amount of the transaction?
What exchange rate are you getting?
The first two are usually disclosed and easy enough to understand. Importantly, they can be reduced or even eliminated depending on the type of card you use.
The third is not so easy. As we get closer to the travel period we begin to watch the exchange rate of the country or region to which we are travelling. This rate is known as the mid-rate and is something that we mortals can never secure. The bigger you are in financial terms, the closer you can get to this rate.
To help your understanding next time you walk past one of those little currency exchange shops or booths, check out the board. Look at the gap between the ‘we buy’ and we sell’ numbers. The current market rate will be in the middle. The difference either side is nearly all profit.
Do the same at the airport. These rates can be really ugly and should only be used if you have zero or close to zero of the local currency and need some before you go any further.
I won’t go into an analysis of Bank travel money cards, Australian Post options or Credit Cards. I have researched and tested these personally and whilst they have improved, my current preferred option is the Citibank Plus Bank account and associated debit card.
Firstly I acknowledge that this is a debit card with no frequent flyer points attached which I’m usually a bit obsessive about. But the maths just doesn’t work with credit cards overseas as you are paying too much for those points due to the costs of the credit card transactions and the poor exchange rate.
The Citibank card has no fees on the account, or on transactions, or on conversion. Also, the exchange rate is one of the best I have found. I’ve compared to other options and actually tested it whilst at money exchange inside a Japanese Post Office which I initially thought would be cheaper, but the Citibank rate was considerably better.
I simply transfer funds from my main bank account before and during our travel and then use the Citibank card at ATMs, shops, Restaurants and where ever I need it.
One lesson whilst travelling in Japan which I guess also applies to some other places around the world was that the Banks there did not accept an International Card. Banking is remarkably old fashioned in Japan, but you do get personal treatment and are made to feel important. After a stressful period visiting Banks in Sapporo, I eventually went to a 7-11 and it worked perfectly. In Italy and Greece, it worked fine at most Banks. Some Department Stores overseas have facilities for International Cards.
Finally, as a security measure, my wife and I have separate accounts and cards rather than separate cards on the same account in case one is lost or stolen when travelling.
This is not a personal recommendation, it is merely information and no-one should rely on this article to base a decision. You need to do your own research to determine which option suits you and your travel plan the best. I have no relationship with Citibank, other than as a customer and receive no financial or other benefit from them or a related party.